Abbott confirms unpopular budget measures

Colin Brinsden, AAP Economics Correspondent

People are already unhappy about the May budget and talk about a deficit tax levy is likely to turn the mood grim.

But Prime Minister Tony Abbott has a ready explanation for a host of likely unpopular measures in his government's first budget.

"What we need is a tough budget now for a bright future tomorrow," he told reporters in Melbourne on Tuesday.

The coalition had made a strong commitment to get the budget back under control and it doesn't intend to "squib" the challenge.

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Mr Abbott won't confirm that a new temporary levy is on the cards, but even if it was, it won't be a broken election promise.

"I think if there was a permanent increase in taxation that would certainly be inconsistent with the sort of things that were said before the election," he said.

Opposition Leader Bill Shorten says Labor will attempt to block any levy in the Senate because it's a bad idea as well as a broken promise.

"Labor will have no part of it," he told reporters in Bendigo.

The latest budget speculation is that workers earning more than $80,000 will be slugged an extra one per cent tax for the next four years, while those on incomes above $180,000 will pay an extra two per cent.

The Australian Council of Social Services is backing the levy and is glad the government has recognised that revenue is a problem.

But the Australian Taxpayers Association says people can't afford another "great new tax".

Prominent economist Saul Eslake believes good tax reform is about broadening the base of the system and lowering tax rates.

"I wouldn't describe (the levy) as good economics," he said.

The latest ANZ-Roy Morgan consumer survey showed confidence tumbling after a speech by Treasurer Joe Hockey that provided some detail of what the commission of audit had considered and where spending cuts might be made.

The commission's recommendations will be revealed on Thursday.

Commonwealth Securities chief economist Craig James says while recent figures show the budget is in better shape than a year ago, the government is highlighting the medium-term challenges.

"The risk for the government is that the rhetoric of austerity could prove too negative," he said in a note to clients.

Doing that will cause consumers to again trim spending and business to delay investment plans.

Australian Industry Group chief Innes Willox fears the debt levy will dampen the economy at a time when it needs to grow.